Earnings quality

Quality of earnings for a small business: what buyers should actually test

Published August 31, 2026 · Reviewed by The Diligence Standard Team · Updated September 11, 2026

A practical SMB explanation of recurring earnings, normalization, add-backs and the difference between reported profit and transferable cash flow.

This guide is organized around the evidence a buyer or seller should be able to reconcile before relying on a transaction claim.